How Have Exxon Mobil’s Revenues And EBITDA Changed In Recent Years?

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Exxon Mobil (NYSE:XOM) revenues have declined by $263 billion (net) between 2013-2017. EBITDA also declined by $35.6 billion during the same period. Most of this change was led by the company’s downstream operations, as the company was reducing its footprint in this segment, and increasing its exposure to the far more profitable upstream business. We have created an interactive dashboard analysis on how Exxon Mobil’s revenues and EBITDA have changed over the last few years, and our estimates for 2018. You can adjust the expected segment-wise revenue, and margin forecast for 2018, and see its impact on the overall revenues and earnings.

Exxon Is Focused On Reducing Its Exposure To Downstream Operations 

Exxon Mobil’s Downstream revenues have shown a declining trend over the past several years as it has looked to reduce its exposure in the business. The downstream sales volume were as high as 6.76 million barrels per day (MBD) in 2008. However, they have been on a decline since then, and the figure stood at 5.50 MBD in 2017. Exxon has looked to sell refining assets in markets where the demand for refined products is stagnant. The company has sold assets in Indonesia and Japan and is said to be in talks to sell downstream assets in other not-so-profitable, stagnant markets. Furthermore, the oil and gas companies are focusing more on upstream operations because of higher returns in the segment. Companies like Marathon Oil and ConocoPhillips have spun off their downstream operations into separate companies. We expect this trend to continue in the coming years, and estimate the sales volume for Exxon to decline to 5.25 MBD by the end of our forecast period. 

Looking at EBITDA, the decline can primarily be attributed to Exxon’s upstream business. Exxon’s upstream EBITDA Margin declined sharply from around 55% in 2013 to 36% in 2016. This can be attributed to the movement in oil prices, which declined sharply, while production costs continued to rise. However, better market conditions, and a recovery in oil prices led to a jump in margins to 45% in 2017. Looking forward, with the OPEC’s move to restrict its oil output, we expect Exxon’s upstream EBITDA Margin to gradually improve to 60% over our forecast period as oil prices continue to rise.

Expect Upstream Business To Drive Near Term Growth 

We estimate the Crude Oil, NGL, & Other Liquids segment revenues to grow in low-double-digits in 2018. While we don’t expect much change in the production, the average price realization will likely grow in mid teens. Our forecast is based on the recent trend seen in oil prices. OPEC continues to be committed to production cuts through the end of the year. This will likely aid the growth in oil prices, and keep the overall inventory levels in check. Additionally, geo-political concerns, such as the Venezuela economic crisis will aid the overall price growth. In fact, the benchmark oil prices have already rallied around 18% year-to-date with Brent at $76. This increase in oil prices will result in higher price realization for oil companies, such as Exxon, and will drive the near term earnings growth.

Note: The revenues shown on the interactive dashboard are gross revenues.

 

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